Washington, D.C. — In response to news that the Consumer Financial Protection Bureau (CFPB) has proposed a rule that would eliminate nearly $49 billion of medical debt that unfairly and inaccurately lowers credit scores for 15 million Americans—preventing them from accessing loans and other financial products—the American Economic Liberties Project released the following statement.

“With a new rule to eliminate the use of medical debt in credit reporting, the CFPB is ensuring that a routine trip to the doctors office or hospital won’t unfairly damage consumers’ credit profile,” said Morgan Harper, Director of Policy and Advocacy at the American Economic Liberties Project. “Error-ridden medical debt is often thrust upon consumers in already-vulnerable situations and its use in credit reporting is difficult to correct—a system that debt collectors and other bad actors use to trap them in a vicious cycle. This system forces Americans to pay disputed or inaccurate bills under the threat of ruined credit, exploiting those who can pay while devastating those who can’t.”

“Creditworthiness should be assessed on someone’s ability to pay off their bills, not on whether they can navigate the complex and confusing world of medical payment disputes,” Harper added. “This commonsense rule does that, and also outlaws egregious practices from lenders, like taking a wheelchair or prosthetic limb as collateral. In doing so, Director Chopra is once again proving why he’s a clear-eyed fighter for working families.”

The CFPB’s proposed rule would prohibit the inclusion of medical debt—which is often error-ridden and inflated by overbilling—on consumer credit reports, fundamentally changing how medical expenses impact creditworthiness. This change means that medical bills, regardless of their amount, will no longer affect an individual’s credit score. The rule is designed to lessen the financial repercussions from unexpected medical emergencies and necessary healthcare services. The use of medical debt in assessing creditworthiness often blocks consumers from accessing credit, securing loans, and other financial products. By eliminating the special medical debt exception, establishing new guardrails for credit reporting companies, and banning repossession of medical devices (like wheelchairs and prosthetic limbs), this rule addresses that pervasive issue—which disproportionately affects vulnerable Americans—and ensures that consumers are not wrongfully penalized for tending to their health.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.